California Court of Appeal, Bartel v. Chicago Title Insurance Co., Docket No. H052083

Punitive Damages

 

Clear and Convincing Standard

 

Insurance Law

 

California Law

 

 

 

“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, §3294, subd. (a).) A plaintiff is never entitled to punitive damages as a matter of right. (Uzyel v. Kadisha (2010) 188 Cal.App.4th 866, 923.) Rather, “a claim for punitive damages requires ‘evidence which establishes by “clear and convincing evidence” that the defendant has been “guilty of oppression, fraud, or malice.” If a plaintiff is to recover on such a claim, it will be necessary that the evidence presented meet this higher evidentiary standard.’” (Food Pro, supra,169 Cal.App.4th at p.994; see Civ. Code, §3294, subd. (a).) In the context of failure to properly administer an insurance claim, punitive damages are ordinarily “based on ‘malice’ or ‘oppression,’ rather than on the third possible ground for the award, ‘fraud.’ Both ‘malice’ and ‘oppression’ are defined in Civil Code section 3294 as involving ‘despicable conduct,’ which in the case of malice ‘is carried on by the defendant with a willful and conscious disregard of the rights or safety of others,’ and as to oppression is ‘conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.’” (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1286–1287 (Tomaselli).) We review de novo whether the undisputed facts underlying Chicago Title’s claim handling in this case satisfy the requirements of Civil Code section 3294, subdivision (a).  (See Ghirardo, supra, 8 Cal.4th at p.801.)

 

 

(…) Furthermore, we have determined that the manner in which Chicago Title repeatedly rejected tender in the face of a clear duty to defend amounted to bad faith. Nevertheless, we are not persuaded that Chicago Title’s bad faith refusal to defend Bartel under the policy until partway through Composti III rises to the level of malice or oppression within the meaning of Civil Code section 3294.

 

 

The heightened legal standard for imposing punitive damages guides our determination. “Under the clear and convincing standard, the evidence must be ‘“‘“so clear as to leave no substantial doubt”’”’ and ‘“‘“sufficiently strong to command the unhesitating assent of every reasonable mind.”’’”’” (Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1158.) This stringent standard must be accompanied by evidence of “‘malice,’” defined as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights ...of others” (Civ. Code, §3294, subd. (c)(1)), or “‘oppression,’” defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights” (id., subd. (c)(2)). “‘Despicable conduct’ is conduct that is ‘“so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.”’ ” (Butte Fire Cases, at p.1159.)

 

 

 

(California Court of Appeal, Bartel v. Chicago Title Insurance Co., May 30, 2025, Docket No. H052083, Certified for Publication)

 

 

California Court of Appeal, 11640 Woodbridge Condominium Homeowners’ Association v. Farmers Insurance Exchange, B333848

Insurance Law

 

Punitive Damages

 

California Law

 

 

 

An insurer may be liable for punitive damages if the insured can prove not only that the insurer denied or delayed the payment of policy benefits unreasonably or without proper cause, but, in doing so, was guilty of malice, oppression or fraud. (Jordan, 148 Cal.App.4th at p. 1080, citing Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 305.)

 

 

 

(California Court of Appeal, March 28, 2025, 11640 Woodbridge Condominium Homeowners’ Association v. Farmers Insurance Exchange, B333848, Certified for Publication)

 

U.S. Court of Appeals for the Ninth Circuit, BladeRoom Group Ltd. v. Emerson Electric Co., Docket No. 19-16583

 

Punitive Damages

Breach of Contract Awards

Trade Secret Misappropriation

California Law

 

 

Under California law, a party cannot collect punitive damages for breach of contract awards.

 

(…) Finally, the same reasons support vacating the jury’s damages findings. The jury awarded damages in two lump sums that did not separate damages for breach of contract from misappropriation. As a result, we have no way to know how much damages the jury intended to allocate for each claim. And because we do not know whether the jury would have found Emerson liable under breach of contract or misappropriation, we cannot tell whether the damages findings would be the same. We therefore vacate the jury’s damages findings.

 

(…) Given the complex issues on appeal, we also address a couple of issues for consideration on the awards of damages and prejudgment interest should they be determined after a new trial.

California Civil Code § 3426.3(a) allows an aggrieved party to recover actual damages and any unjust enrichment on a trade secret misappropriation claim. Because the jury here found that Emerson willfully and maliciously misappropriated BladeRoom’s trade secrets, the district court awarded punitive damages equal to the $30 million in compensatory damages.

Under California law, however, a party cannot collect punitive damages for breach of contract awards. Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 516 (1994). Because the jury awarded a lump sum for breach of contract and misappropriation damages, Emerson correctly argued that the district court could not assume that the whole award went to misappropriation.

Courts that apply California law use three factors to award punitive damages. Neal v. Farmers Ins. Exch., 21 Cal. 3d 910, 928 (1978). The second factor, “the amount of compensatory damages awarded,” id., helps balance a punitive damages award with actual harm that is caused. See id. (“In general, even an act of considerable reprehensibility will not be seen to justify a proportionally high amount of punitive damages if the actual harm suffered is small.”). When weighing the second factor, the district court here merely noted that under Neal, 21 Cal. 3d at 928, “compensatory damages are a ‘relevant yardstick’ for punitive damages.” And, in a footnote, the district court explained that “the trial evidence shows that either the breach of contract or misappropriation claim for which the jury found liability could support the amount of compensatory damages it awarded.”

The district court misapplied the second factor for two reasons. One, the district court abused its discretion based on an earlier order denying Emerson’s motion to compel. And second, the district court never explained why it allocated compensatory damages the way it did.

First, in the earlier order, the district court found that “there is no way for the parties or the court to know how much was awarded for breach of contract and how much was awarded for misappropriation of trade secrets.” To be sure, the district court confirmed that “only the jury knows the number.”

A district court abuses its discretion when it “reaches a result that is illogical, implausible, or without support in inferences that may be drawn from the facts in the record.” United States v. Hinkson, 585 F.3d 1247, 1262 n. 21 (9th Cir. 2009) (collecting cases from other circuits). It was illogical for the district court to find how much the jury awarded for each claim when it already found that it had “no way” to do just that. See id. The district court should have explained why its reasoning changed. Instead, after awarding punitive damages, the district court issued another order that adopted the same reasoning in the order that denied Emerson’s motion to compel. In brief, the district court flipped its reasoning twice without explaining why. And the inconsistency visibly benefited BladeRoom because it cost Emerson millions in punitive damages that the district court would not have awarded otherwise. In sum, the inconsistency was “beyond the pale of reasonable justification” and an abuse of discretion. Harman v. Apfel, 211 F.3d 1172, 1175 (9th Cir. 2000).

 

(U.S. Court of Appeals for the Ninth Circuit, August 30, 2021, BladeRoom Group Ltd. v. Emerson Electric Co., Docket No. 19-16583, For Publication)

 

U.S. Supreme Court, Dutra Group v. Batterton, Docket No. 18-266

Admiralty Law

Maritime Law

Common Law

Equity

Jones Act

Punitive Damages

Exemplary Damages

Unseaworthiness Actions

Maritime Claim of Maintenance and Cure.

By granting federal courts jurisdiction over maritime and admiralty cases, the Constitution implicitly directs federal courts sitting in admiralty to proceed “in the man­ner of a common law court.” Exxon Shipping Co. v. Baker, 554 U. S. 471, 489–490 (2008). Thus, where Congress has not prescribed specific rules, federal courts must develop the “amalgam of traditional common-law rules, modifica­tions of those rules, and newly created rules” that forms the general maritime law. East River S. S. Corp. v. Transamerica Delaval Inc., 476 U. S. 858, 864–865 (1986). But maritime law is no longer solely the province of the Federal Judiciary. “Congress and the States have legis­lated extensively in these areas.” Miles v. Apex Marine Corp., 498 U. S. 19, 27 (1990). When exercising its inher­ent common-law authority, “an admiralty court should look primarily to these legislative enactments for policy guidance.” Ibid. We may depart from the policies found in the statutory scheme in discrete instances based on long-established history, see, e.g., Atlantic Sounding Co. v. Townsend, 557 U. S. 404, 424–425 (2009), but we do so cautiously in light of Congress’s persistent pursuit of “uniformity in the exercise of admiralty jurisdiction.” Miles, supra, at 26 (quoting Moragne v. States Marine Lines, Inc., 398 U. S. 375, 401 (1970)).

This case asks whether a mariner may recover punitive damages on a claim that he was injured as a result of the unseaworthy condition of the vessel. We have twice con­fronted similar questions in the past several decades, and our holdings in both cases were based on the particular claims involved. In Miles, which concerned a wrongful-death claim under the general maritime law, we held that recovery was limited to pecuniary damages, which did not include loss of society. 498 U. S., at 23. And in Atlantic Sounding, after examining centuries of relevant case law, we held that punitive damages are not categorically barred as part of the award on the traditional maritime claim of maintenance and cure. 557 U. S., at 407. Here, because there is no historical basis for allowing punitive damages in unseaworthiness actions, and in order to promote uniformity with the way courts have applied parallel statutory causes of action, we hold that punitive damages remain unavailable in unseaworthiness actions.

The seaman’s right to recover damages for personal injury on a claim of unseaworthiness originates in the admiralty court decisions of the 19th century. At the time, “seamen led miserable lives.” D. Robertson, S. Friedell, & M. Sturley, Admiralty and Maritime Law in the United States 163 (2d ed. 2008). Maritime law was largely judge­made, and seamen were viewed as “emphatically the wards of the admiralty.” Harden v. Gordon, 11 F. Cas. 480, 485 (No. 6,047) (CC Me. 1823). In that era, the pri­mary responsibility for protecting seamen lay in the courts, which saw mariners as “peculiarly entitled to”—and particularly in need of—judicial protection “against the effects of the superior skill and shrewdness of masters and owners of ships.” Brown v. Lull, 4 F. Cas. 407, 409 (No. 2,018) (CC Mass. 1836) (Story, J.).

Courts of admiralty saw it as their duty not to be “con­fined to the mere dry and positive rules of the common law” but to “act upon the enlarged and liberal jurispru­dence of courts of equity; and, in short, so far as their powers extended, they acted as courts of equity.” This Court interpreted the Constitution’s grant of admi­ralty jurisdiction to the Federal Judiciary as “the power to . . . dispose of a case as justice may require.” The Reso­lute, 168 U. S. 437, 439 (1897).

Courts used this power to protect seamen from injury primarily through two causes of action. The first, mainte­nance and cure, has its roots in the medieval and renaissance law codes that form the ancient foundation of mari­time common law.

The duty of maintenance and cure requires a ship’s master “to provide food, lodging, and medical services to a seaman injured while serving the ship.” Lewis v. Lewis & Clark Marine, Inc., 531 U. S. 438, 441 (2001). This duty, “which arises from the contract of employment, does not rest upon negligence or culpability on the part of the owner or master, nor is it restricted to those cases where the seaman’s employment is the cause of the injury or illness.” Calmar S. S. Corp. v. Taylor, 303 U. S. 525, 527 (1938).

The second claim, unseaworthiness, is a much more recent development and grew out of causes of action unre­lated to personal injury. In its earliest forms, an unsea­worthiness claim gave sailors under contract to sail on a ship the right to collect their wages even if they had re­fused to board an unsafe vessel after discovering its condi­tion. See, e.g., Dixon v. The Cyrus, 7 F. Cas. 755, 757 (No. 3,930) (Pa. 1789); Rice v. The Polly & Kitty, 20 F. Cas. 666, 667 (No. 11,754) (Pa. 1789). Similarly, unseaworthiness was a defense to criminal charges against seamen who refused to obey a ship master’s orders. See, e.g., United States v. Nye, 27 F. Cas. 210, 211 (No. 15,906) (CC Mass. 1855); United States v. Ashton, 24 F. Cas. 873, 874–875 (No. 14,470) (CC Mass. 1834). A claim of unseaworthiness could also be asserted by a shipper to recover damages or by an insurer to deny coverage when the poor condition of the ship resulted in damage to or loss of the cargo. See The Caledonia, 157 U. S. 124, 132–136 (1895) (cataloging cases).

Only in the latter years of the 19th century did unsea­worthiness begin a long and gradual evolution toward remedying personal injury. Courts began to extend the cases about refusals to serve to allow recovery for mari­ners who were injured because of the unseaworthy condi­tion of the vessel on which they had served. These early cases were sparse, and they generally allowed recovery only when a vessel’s owner failed to exercise due diligence to ensure that the ship left port in a seaworthy condition (…) Because a claimant had to show that he was injured by some aspect of the ship’s condition that rendered the vessel unseawor­thy, a claim could not prevail based on “the negligence of the master, or any member of the crew.” (…) Instead, a seaman had to show that the owner of the vessel had failed to exercise due diligence in ensuring the ship was in seaworthy condi­tion. See generally Dixon v. United States, 219 F. 2d 10, 12–14 (CA2 1955) (Harlan, J.) (cataloging evolution of the claim).

(It was only after the passage of the Jones Act that negligence by a fellow mariner provided a reliable basis for recovery (fn. 4)).

Tremendous shifts in mariners’ rights took place be­tween 1920 and 1950. First, during and after the First World War, Congress enacted a series of laws regulating maritime liability culminating in the Merchant Marine Act of 1920, §33, 41 Stat. 1007 (Jones Act), which codified the rights of injured mariners and created new statutory claims that were freed from many of the common-law limitations on recovery. The Jones Act provides injured seamen with a cause of action and a right to a jury. 46 U. S. C. §30104. Rather than create a new structure of substantive rights, the Jones Act incorporated the rights provided to railway workers under the Federal Employers’ liability Act (FELA), 45 U. S. C. §51 et seq. 46 U. S. C. §30104. In the 30 years after the Jones Act’s passage, “the Act was the vehicle for almost all seamen’s personal injury and death actions.” Gilmore & Black §6–20, at 327.

But the Jones Act was overtaken in the 1950s by the second fundamental change in personal injury maritime claims—and it was this Court, not Congress, that played the leading role. In a pair of decisions in the late 1940s, the Court transformed the old claim of unseaworthiness, which had demanded only due diligence by the vessel owner, into a strict-liability claim. In Mahnich v. South­ern S. S. Co., 321 U. S. 96 (1944), the Court stated that “the exercise of due diligence does not relieve the owner of his obligation” to provide a seaworthy ship and, in the same ruling, held that the fellow-servant doctrine did not provide a defense. Id., at 100, 101.

(…) Less than two years later, we affirmed that the duty of seaworthiness was “essentially a species of liability without fault . . . neither limited by conceptions of negligence nor contrac­tual in character. It is a form of absolute duty owing to all within the range of its humanitarian policy.” Seas Ship­ping Co. v. Sieracki, 328 U. S. 85, 94–95 (1946).

From Mahnich forward, “the decisions of this Court have undeviatingly reflected an understanding that the owner’s duty to furnish a seaworthy ship is absolute and completely independent of his duty under the Jones Act to exercise reasonable care.” Mitchell v. Trawler Racer, Inc., 362 U. S. 539, 549 (1960). As a result of Mah­nich and Sieracki, between the 1950s and 1970s “the unseaworthiness count was the essential basis for recov­ery with the Jones Act count preserved merely as a jury-getting device.”

(…) The shifts in plaintiff preferences between Jones Act and unseaworthiness claims were possible because of the significant overlap between the two causes of action. One leading treatise goes so far as to describe the two claims as “alternative ‘grounds’ of recov­ery for a single cause of action.” 2 R. Force & M. Norris, The Law of Seamen §30:90, p. 30–369 (5th ed. 2003). The two claims are so similar that, immediately after the Jones Act’s passage, we held that plaintiffs could not submit both to a jury. Plamals, supra, at 156–157 (“Sea­men may invoke, at their election, the relief accorded by the old rules against the ship, or that provided by the new against the employer. But they may not have the benefit of both”). We no longer require such election. See McAl­lister v. Magnolia Petroleum Co., 357 U. S. 221, 222, n. 2 (1958). But a plaintiff still cannot duplicate his recovery by collecting full damages on both claims because, “whether or not the seaman’s injuries were occasioned by the un­seaworthiness of the vessel or by the negligence of the master or members of the crew, . . . there is but a single wrongful invasion of his primary right of bodily safety and but a single legal wrong.” Peterson, 278 U. S., at 138.

(The decline of Jones Act claims was arrested, although not reversed, by our holding that some negligent actions on a vessel may create Jones Act liability without rendering the vessel unseaworthy. See Usner v. Luckenbach Overseas Corp., 400 U. S. 494 (1971); see also 1B Benedict on Admiralty §23, p. 3–35 (7th rev. ed. 2018) (fn. 5)).

For claims of unseaworthiness, the overwhelming his­torical evidence suggests that punitive damages are not available.

(…) The lack of punitive damages in traditional maritime law cases is practically dispositive. By the time the claim of unseaworthiness evolved to remedy personal injury, punitive damages were a well-established part of the common law. Exxon Shipping, 554 U. S., at 491. Ameri­can courts had awarded punitive (or exemplary) damages from the Republic’s earliest days. See, e.g., Genay v. Nor­ris, 1 S. C. L. 6, 7 (1784); Coryell v. Colbaugh, 1 N. J. L. 77, 78 (1791). And yet, beyond the decisions discussed above, Batterton presents no decisions from the formative years of the personal injury unseaworthiness claim in which exemplary damages were awarded. From this we conclude that, unlike maintenance and cure, unseaworthiness did not traditionally allow recovery of punitive damages.

In light of this overwhelming historical evidence, we cannot sanction a novel remedy here unless it is required to maintain uniformity with Congress’s clearly expressed policies. Therefore, we must consider the remedies typi­cally recognized for Jones Act claims.

The Jones Act adopts the remedial provisions of FELA, and by the time of the Jones Act’s passage, this Court and others had repeatedly interpreted the scope of damages available to FELA plaintiffs. These early decisions held that “the damages recoverable under FELA are limited. . . strictly to the financial loss . . . sustained.”

(We also note that Congress declined to allow punitive damages when it enacted the Death on the High Seas Act. 46 U. S. C. §30303 (allowing “fair compensation for the pecuniary loss sustained” for a death on the high seas) (fn. 8)).

(…) Because unseaworthiness in its current strict-liability form is our own invention and came after passage of the Jones Act, it would exceed our current role to introduce novel remedies contradictory to those Congress has provided in similar areas. ((…) Declining to create remedy “that goes well beyond the limits of Congress’ ordered system of recovery”).

(…) The duty of mainte­nance and cure requires the master to provide medical care and wages to an injured mariner in the period after the injury has occurred. Calmar S. S. Corp., 303 U. S., at 527–528. By contrast, both the Jones Act and unseaworthiness claims compensate for the injury itself and for the losses resulting from the injury. Peterson, supra, at 138. In such circumstances, we are particularly mindful of the rule that requires us to promote uniformity between mari­time statutory law and maritime common law.

(…) Unseaworthiness claims run against the owner of the vessel (…) See Sieracki, 328 U. S., at 100 (The duty of seaworthiness is “peculiarly and exclusively the obligation of the owner. It is one he cannot delegate”).

Finally, because “noncompensatory damages are not part of the civil-code tradition and thus unavailable in such countries,” Exxon Shipping, 554 U. S., at 497, allow­ing punitive damages would place American shippers at a significant competitive disadvantage and would discour­age foreign-owned vessels from employing American sea­men. See Gotanda, Punitive Damages: A Comparative Analysis, 42 Colum. J. Transnat’l L. 391, 396, n. 24 (2004) (listing civil-law nations that restrict private plaintiffs to compensatory damages).

(…) In light of these changes and of the roles now played by the Judiciary and the political branches in protecting sailors, the special solicitude to sailors has only a small role to play in contemporary maritime law.

Secondary sources: Benedict on Admiralty (7th rev. ed. 2018); R. Force & M. Norris, The Law of Seamen (5th ed. 2003).

(U.S. Supreme Court, June 24, 2019, Dutra Group v. Batterton, Docket No. 18-266, J. Alito)

Goodyear Tire & Rubber Co. v. Haeger, Docket 15-1406

Discovery misconduct: Contempt of court: Frivolous claims: Bad faith: Attorney's fees (shifting): Punitive damages:

Federal courts possess certain “inherent powers,” not conferred by rule or statute, “to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” Link v. Wabash R. Co., 370 U. S. 626, 630–631 (1962). That authority includes “the ability to fashion an appropriate sanction for conduct which abuses the judicial process.” Chambers v. NASCO, Inc., 501 U. S. 32, 44–45 (1991). And one permissible sanction is an “assessment of attorney’s fees”—an order, like the one issued here, in­structing a party that has acted in bad faith to reimburse legal fees and costs incurred by the other side. Id., at 45. This Court has made clear that such a sanction, when imposed pursuant to civil procedures, must be compensa­tory rather than punitive in nature. See Mine Workers v. Bagwell, 512 U. S. 821, 826–830 (1994) (distinguishing compensatory from punitive sanctions and specifying the procedures needed to impose each kind). In other words, the fee award may go no further than to redress the wronged party “for losses sustained”; it may not impose an additional amount as punishment for the sanctioned party’s misbehavior. Id., at 829 (quoting United States v. Mine Workers, 330 U. S. 258, 304 (1947)). To level that kind of separate penalty, a court would need to provide procedural guarantees applicable in criminal cases, such as a “beyond a reasonable doubt” standard of proof. See id., at 826, 832–834, 838–839. When (as in this case) those criminal-type protections are missing, a court’s shifting of fees is limited to reimbursing the victim.

That means, pretty much by definition, that the court can shift only those attorney’s fees incurred because of the misconduct at issue. Compensation for a wrong, after all, tracks the loss resulting from that wrong. So as we have previously noted, a sanction counts as compensatory only if it is “calibrated to the damages caused by” the bad-faith acts on which it is based. A fee award is so calibrated if it covers the legal bills that the litigation abuse occasioned. But if an award extends further than that—to fees that would have been incurred without the misconduct—then it crosses the boundary from compensa­tion to punishment. Hence the need for a court, when using its inherent sanctioning authority (and civil proce­dures), to establish a causal link between the litigant’s misbehavior and legal fees paid by the opposing party.

Rule-based and statutory sanction regimes similarly require courts to find such a causal connection before shifting fees. For example, the Federal Rules of Civil Procedure provide that a district court may order a party to pay attorney’s fees “caused by” discovery misconduct, Rule 37(b)(2)(C), or “directly resulting from” misrepresentations in pleadings, motions, and other papers, Rule 11(c)(4). And under 28 U. S. C. §1927, a court may require an attorney who unreasonably multiplies proceedings to pay attorney’s fees incurred “because of” that misconduct. Those provisions confirm the need to establish a causal link between misconduct and fees when acting under inherent authority, given that such undelegated powers should be exercised with especial “restraint and discretion.” Roadway Express, Inc. v. Piper, 447 U. S. 752, 764 (1980).

That kind of causal connection, as this Court explained in another attorney’s fees case, is appropriately framed as a but-for test: The complaining party (here, the Haegers) may recover “only the portion of his fees that he would not have paid but for” the misconduct. Fox v. Vice, 563 U. S. 826, 836 (2011); see Paroline v. United States, 572 U. S. ___, ___ (2014) (slip op., at 12).

In Fox, a prevailing defendant sought reim­bursement under a fee-shifting statute for legal expenses incurred in defending against several frivolous claims. See 563 U. S., at 830; 42 U. S. C. §1988.

Substitute “discovery abuse” for “frivolous claim” (…), and the same thing goes in this case.

Bagwell (Mine Workers v. Bagwell, 512 U. S. 821) also addressed “coercive” sanctions, designed to make a party comply with a court order. 512 U. S., at 829. That kind of sanction is not at issue here.

(U.S.S.C., April 18, 2017, Goodyear Tire & Rubber Co. v. Haeger, Docket 15-1406, J. Kagan delivered the opinion of the Court, in which all other Members joined, except J. Gorsuch, who took no part in the considera­tion or decision of the case).

Aux cours fédérales sont attachées certaines compétences inhérentes, conférées non par la loi, de gérer leurs affaires internes ou le cours des procédures, pour permettre une résolution diligente et sans retard des dossiers. Parmi ces compétences, on compte l'autorité de déterminer une sanction appropriée pour une conduite qui abuse du système judiciaire. L'une de ces sanctions est la condamnation d'une partie qui s'est comportée de mauvaise foi au paiement des honoraires d'avocat et des frais de l'autre partie. Ce type de condamnation, dans le cadre de procédures civiles, doit être de nature compensatoire et non punitive. Elle ne peut que compenser la partie de ses pertes effectives, et ne permet pas d'imposer un montant additionnel comme punition du comportement abusif. Si elle entendait condamner à des dommages punitifs, la cour devrait conférer à la partie à condamner les garanties de procédure applicables aux procédures pénales, telles que l'exigence de la condamnation possible qu'en cas de "preuve au-delà d'un doute raisonnable".

(Une décision de 1994 distingue les dommages compensatoires des dommages punitifs et spécifie les procédures nécessaires pour condamner à payer ces deux types de dommage).

De ce qui précède découle que la cour ne peut condamner à payer que la fraction des honoraires et frais de la cause due en raison de la conduite inadmissible de l'autre partie. La cour doit établir le lien de causalité à cet égard.

Ce qui précède concerne certes le pouvoir inhérent du Tribunal de sanctionner, mais dans le cas où le pouvoir de sanctionner découle de la loi, la cour devra aussi établir un tel lien de causalité avant de condamner à payer les honoraires d'avocat de l'autre partie. Par exemple, les Règles fédérales de procédure civile disposent qu'une cour de district peut condamner une partie aux frais d'avocat en cas d'inconduite dans la phase de "discovery", ou résultant d'un défaut de diligence dans la préparation et le dépôt des mémoires, requêtes, et autres pièces (Rules 37(b)(2)(C) et 11(c)(4)). Et selon 28 U.S.C. §1927, une cour peut condamner au paiement des honoraires adverse un avocat qui multiplie sans raison les procédures. Ces dispositions confirment la nécessité d'établir un lien causal entre la conduite répréhensible et les honoraires de l'adverse partie, considérant que les pouvoirs inhérents doivent être exercés avec une retenue toute spéciale.

Le lien de causalité est de type "but-for" : la partie ne peut obtenir paiement de son adversaire que de la fraction des honoraires qui n'aurait pas été due en l'absence du comportement inadmissible.

(Un exemple qui traite de la prise en charge des frais et honoraires de celui qui l'emporte contre son adversaire qui avait procédé témérairement : Fox v. Vice, 563 U. S. 826, 830 (2011) ; cf. U.S.C. §1988). La procédure téméraire et l'abus de la procédure de "discovery" sont des notions de même nature s'agissant de la question de la prise en charge des frais et honoraires par la partie adverse.

(Quant à elle, la décision Mine Workers v. Bagwell, 512 U. S. 821 porte sur les mesures de contrainte qu'une cour peut prendre en vue d'obtenir l'exécution de ses ordonnances).

Halo Electronics, Inc. v. Pulse Electronics, Inc., Docket 14-1513

Patent (infringement and damages increase): Treble damages: Punitive damages: Tort: Willful: Wanton: Reckless: Evidence (clear and convincing): Evidence (preponderance of the evidence): Discretion (abuse of discretion): Trolls: Section 284 of the Patent Act provides that, in a case of infringement, courts “may increase the damages up to three times the amount found or assessed.” 35 U. S. C. §284.

In In re Seagate Technology, LLC, 497 F. 3d 1360 (2007) (en banc), the United States Court of Appeals for the Federal Circuit adopted a two-part test for determin­ing when a district court may increase damages pursuant to §284. Under Seagate, a patent owner must first “show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” Id., at 1371. Second, the patentee must demonstrate, again by clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Ibid. The question before us is whether this test is consistent with §284. We hold that it is not.

Enhanced damages are as old as U.S. patent law. The Patent Act of 1793 mandated treble damages in any suc­cessful infringement suit. See Patent Act of 1793, §5, 1 Stat. 322. In the Patent Act of 1836, however, Congress changed course and made enhanced damages discretion­ary, specifying that “it shall be in the power of the court to render judgment for any sum above the amount found by the verdict . . . not exceeding three times the amount thereof, according to the circumstances of the case.” Pat­ent Act of 1836, §14, 5 Stat. 123. In construing that new provision, this Court explained that the change was prompted by the “injustice” of subjecting a “defendant who acted in ignorance or good faith” to the same treatment as the “wanton and malicious pirate.” Seymour v. McCor­mick, 16 How. 480, 488 (1854). There “is no good reason,” we observed, “why taking a man’s property in an invention should be trebly punished, while the measure of damages as to other property is single and actual damages.” Id., at 488–489. But “where the injury is wanton or malicious, a jury may inflict vindictive or exemplary damages, not to recompense the plaintiff, but to punish the defendant.” Id., at 489.

(…) No need any more to award enhanced damages to compensate for the attorney fees: enact­ment in 1952 of 35 U. S. C. §285, which authorized district courts to award reasonable attorney’s fees to prevailing parties in “exceptional cases” under the Patent Act. See Octane Fitness, LLC v. ICON Health & Fitness Inc., 572 U. S. ___, ___ (2014) (slip op., at 7).

It is against this backdrop that Congress, in the 1952 codification of the Patent Act, enacted §284. “The stated purpose” of the 1952 revision “was merely reorganization in language to clarify the statement of the statutes.” Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U. S. 476, 505, n. 20 (1964). This Court accordingly described §284—consistent with the history of enhanced damages under the Patent Act—as providing that “punitive or ‘increased’ damages” could be recovered “in a case of willful or bad-faith infringement.” Id., at 508; see also Dowling v. United States, 473 U. S. 207, 227, n. 19 (1985) (“willful infringement”); Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank, 527 U. S. 627, 648, n. 11 (1999) (describing §284 damages as “punitive”).

Halo alleges that Pulse infringed its patents for electronic packages containing transformers designed to be mounted to the surface of circuit boards. In 2002, Halo sent Pulse two letters offering to license Halo’s patents. After one of its engineers concluded that Halo’s patents were invalid, Pulse continued to sell the allegedly infring­ing products.

Said the Court: The pertinent text of §284 provides simply that “the court may increase the damages up to three times the amount found or assessed.” 35 U. S. C. §284. That lan­guage contains no explicit limit or condition, and we have emphasized that the “word ‘may’ clearly connotes discre­tion.” Martin v. Franklin Capital Corp., 546 U. S. 132, 136 (2005) (quoting Fogerty v. Fantasy, Inc., 510 U. S. 517, 533 (1994)).

Awards of enhanced damages under the Patent Act over the past 180 years establish that they are not to be meted out in a typical infringement case, but are instead de­signed as a “punitive” or “vindictive” sanction for egre­gious infringement behavior. The sort of conduct warrant­ing enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate. District courts enjoy discre­tion in deciding whether to award enhanced damages, and in what amount. But through nearly two centuries of discretionary awards and review by appellate tribunals, “the channel of discretion has narrowed,” Friendly, In­ discretion About Discretion, 31 Emory L. J. 747, 772 (1982), so that such damages are generally reserved for egregious cases of culpable behavior.

The Seagate test reflects, in many respects, a sound recognition that enhanced damages are generally appro­priate under §284 only in egregious cases. That test, however, “is unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts.” Octane Fitness, 572 U. S., at ___ (slip op., at 7) (construing §285 of the Patent Act). In particular, it can have the effect of insulating some of the worst patent infringers from any liability for enhanced damages. (…) It is not clear why an independent showing of objective recklessness—by clear and convincing evidence, no less—should be a prerequisite to enhanced damages (…) The subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.

(…) But culpability is generally measured against the knowledge of the actor at the time of the challenged con­duct. See generally Restatement (Second) of Torts §8A (1965) (“intent” denotes state of mind in which “the actor desires to cause consequences of his act” or “believes” them to be “substantially certain to result from it”); W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts §34, p. 212 (5th ed. 1984) (describing willful, wanton, and reckless as “looking to the actor’s real or supposed state of mind”); see also Kolstad v. American Dental Assn., 527 U. S. 526, 538 (1999) (“Most often . . . eligibility for punitive awards is characterized in terms of a defendant’s motive or intent”). In Safeco Ins. Co. of America v. Burr, 551 U. S. 47 (2007), we stated that a person is reckless if he acts “knowing or having reason to know of facts which would lead a reasonable man to real­ize” his actions are unreasonably risky. Id., at 69. The Court found that the defendant had not recklessly violated the Fair Credit Reporting Act because the defendant’s interpretation had “a foundation in the statutory text” and the defendant lacked “the benefit of guidance from the courts of appeals or the Federal Trade Commission” that “might have warned it away from the view it took.” Id., at 69–70. Nothing in Safeco suggests that we should look to facts that the defendant neither knew nor had reason to know at the time he acted.

Section 284 allows district courts to punish the full range of culpable behavior. Yet none of this is to say that enhanced damages must follow a finding of egregious misconduct. As with any exercise of discretion, courts should continue to take into account the particular cir­cumstances of each case in deciding whether to award damages, and in what amount. Section 284 permits dis­trict courts to exercise their discretion in a manner free from the inelastic constraints of the Seagate test. Con­sistent with nearly two centuries of enhanced damages under patent law, however, such punishment should generally be reserved for egregious cases typified by will­ful misconduct.

The Seagate test is also inconsistent with §284 because it requires clear and convincing evidence to prove reck­lessness. On this point Octane Fitness is again instruc­tive. There too the Federal Circuit had adopted a clear and convincing standard of proof, for awards of attorney’s fees under §285 of the Patent Act. Because that provision supplied no basis for imposing such a heightened standard of proof, we rejected it. See Octane Fitness, 572 U. S., at ___ (slip op., at 11). We do so here as well. Like §285, §284 “imposes no specific evidentiary burden, much less such a high one.” Ibid. And the fact that Congress ex­pressly erected a higher standard of proof elsewhere in the Patent Act, see 35 U. S. C. §273(b), but not in §284, is telling. Furthermore, nothing in historical practice sup­ports a heightened standard. As we explained in Octane Fitness, “patent-infringement litigation has always been governed by a preponderance of the evidence standard.” 572 U. S., at ___ (slip op., at 11). Enhanced damages are no exception.

Finally, because we eschew any rigid formula for award­ing enhanced damages under §284, we likewise reject the Federal Circuit’s tripartite framework for appellate re­view. In Highmark Inc. v. Allcare Health Management System, Inc., 572 U. S. ___ (2014), we built on our Octane Fitness holding to reject a similar multipart standard of review. Because Octane Fitness confirmed district court discretion to award attorney fees, we concluded that such decisions should be reviewed for abuse of discretion. Highmark, 572 U. S., at ___ (slip op., at 1). The same conclusion follows naturally from our holding here. Section 284 gives district courts discretion in meting out enhanced damages. It “commits the determination” whether enhanced damages are appropriate “to the discre­tion of the district court” and “that decision is to be re­viewed on appeal for abuse of discretion.” Id., at ___ (slip op., at 4).

(Trolls, in the patois of the patent community, are entities that hold patents for the primary purpose of enforcing them against alleged infringers, often exacting outsized licens­ing fees on threat of litigation.)

Books: Chisum on Patents §20.03[4][b][iii], pp. 20–343 to 20–344 (2011); Friendly, In­discretion About Discretion, 31 Emory L. J. 747, 772 (1982); W. Keeton,

D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts §34, p. 212 (5th ed. 1984).

(U.S.S.C., Jun. 13, 2016, Halo Electronics, Inc. v. Pulse Electronics, Inc., Docket 14-1513, C.J. Roberts, unanimous).

La loi fédérale sur les brevets prévoit à sa Section 284 qu’en cas de violation du droit d’exclusivité, le Tribunal peut tripler le dommage dû au lésé (35 U. S. C. §284).

Dans sa jurisprudence Seagate (2007), la cour d’appel pour le Circuit fédéral a adopté un test en deux parties pour déterminer si une cour de district fédérale peut augmenter les dommages-intérêts en application de la Section 284. Ainsi, selon Seagate, le titulaire d’un brevet doit d’abord démontrer, selon le standard des preuves claires et convaincantes (clear and convincing evidence), que l’auteur de l’acte illicite a agi malgré une haute vraisemblance objective que son acte constituait une violation d’un brevet valide. En second lieu, le titulaire du brevet doit démontrer, à nouveau selon le standard des preuves claires et convaincantes, que le risque de violation était soit connu soit tellement évident qu’il aurait dû être connu de l’auteur présumé de la violation. La question que pose la présente espèce est de savoir si ce test est compatible avec la Section 284. La Cour juge ici que tel n’est pas le cas.

L’institution des dommages punitifs est aussi ancienne que le droit fédéral des brevets. La loi fédérale de 1793 sur les brevets prescrivait des dommages-intérêts triplés en cas d’aboutissement d’une action en violation. Dans la loi fédérale de 1836 sur les brevets, cependant, le Congrès a modifié ce principe en stipulant que les dommages punitifs seraient désormais discrétionnaires, précisant qu’il était de la compétence de la cour de les prononcer, jusqu’à un montant correspondant au triple du dommage effectif, selon les circonstances du cas. En interprétant cette nouvelle disposition, la Cour exposa que la ratio legis était à rechercher dans l’injustice consistant à soumettre l’auteur d’une violation qui a agi par ignorance ou  de bonne foi au même traitement que l’auteur qui a agi en toute connaissance de cause. La Cour observa qu’il n’existait aucune bonne raison permettant de justifier la condamnation au triple du dommage effectif dans le cas d’une violation du droit de propriété découlant d’un brevet, alors que la condamnation pour une violation d’un droit ordinaire de propriété se limitait au dommage effectif. Mais quand la violation est consciente ou malicieuse, un Jury peut condamner de manière exemplaire, non pas pour enrichir le demandeur, mais pour punir le défendeur.

Il est ici remarqué qu’il n’existe plus de raisons de prononcer des dommages punitifs à titre de dépens. En effet, la promulgation en 1952 de la Section 285 du Livre 35 des lois fédérales autorise désormais les cours de district fédérales à allouer des dépens raisonnables en faveur des parties victorieuses dans les procédures en droit des brevets, mais cela toutefois dans des cas exceptionnels.

C’est également en 1952 que le Congrès a promulgué la section 284. Le but de la révision de 1952 était principalement de réorganiser la formulation de la loi, à des fins de clarification. Conformément à ce but, la Cour a interprété la Section 284 selon l’histoire des dommages punitifs au sens du droit fédéral des brevets : les dommages punitifs sont prononcés en cas de violation intentionnelle ou de mauvaise foi.

La Cour juge que le texte même de la Section 284 stipule que le Tribunal peut augmenter l’indemnisation jusqu’à trois fois la somme du dommage effectif. Cette formulation ne contient aucune limitation ou condition et le mot « peut » implique clairement discrétion.

Une indemnisation plus importante que le montant du dommage effectif, dans les affaires fondées sur le droit des brevets et jugées durant les 180 années passées, n’est pas accordée dans les cas typiques de violation d’un brevet, mais est réservée pour sanctionner les violations les plus flagrantes et les plus sérieuses. Le type de conduite méritant le prononcé de dommages punitifs a été qualifié par la Cour de conduite consciente et volontaire, sans égard aux droits d’autrui, malicieuse, ou de mauvaise foi. Quant à elle, la discrétion accordée aux cours de district fédérales relativement au prononcé de dommages punitifs s’est quelque peu réduite au fil du temps : ces dommages punitifs sont aujourd’hui réservés pour sanctionner les violations les plus sérieuses.

Le test retenu par la jurisprudence Seagate reflète à juste titre pour une bonne part la notion que des dommages punitifs ne sont appropriés que dans les cas de graves violations. Cependant ce test est trop rigide et il empiète par trop sur la discrétion que la loi confère aux cours de district fédérales. En particulier, ce test peut avoir pour effet paradoxal de protéger d’une condamnation à des dommages punitifs certaines des pires violations des droits conférés par un brevet. En effet, on ne voit pas pourquoi la preuve d’un comportement objectivement sans égard pour les droits d’autrui devrait être une condition préalable à une condamnation à des dommages punitifs (dite preuve devant au surplus satisfaire le difficile critère de preuve claire et convaincante). La volonté subjective de celui qui porte atteinte aux droits conférés par le brevet (soit l’intention de commettre une infraction ou l’acceptation de l’infraction sans nécessairement la rechercher) doit suffire, au cas par cas, à permettre le prononcé de dommages punitifs, sans de demander si le comportement était objectivement sans égard.

A l’appui de ce qui précède, on remarquera que la culpabilité en responsabilité civile est généralement déterminée à la lumière de ce que savait l’auteur au moment de la commission de son acte illicite (cf. Restatement (Second) of Torts §8A (1965)). En droit général de la responsabilité civile, le prononcé de dommages punitifs dépend des motifs ou de l’intention de l’auteur. Dans une jurisprudence de 2007, la Cour a jugé qu’un acte était commis sans égard (reckless) si son auteur connaissait ou avait des raisons de connaître des faits qui aurait conduit un homme raisonnable à réaliser que son acte était déraisonnablement risqué. Dans sa décision de 2007, la Cour a précisé que l’auteur avait porté sans égard atteinte au « Fair Credit Reporting Act » parce que son interprétation, bien qu’erronée, pouvait se justifier par le texte de la loi. Rien dans cette décision ne suggère qu’un Tribunal devrait prendre en compte des faits que le défendeur ne connaissait pas et n’avait pas de raison de connaître au moment de son acte.

En résumé, la Section 284 permet aux cours de district fédérales de punir toute la lignée de comportements illicites. Mais cette Section n’ordonne pas le prononcé de dommages punitifs que dans les cas de violations extrêmes. Comme dans toutes les situations où l’exercice de la discrétion de la cour est de mise, les Tribunaux sont tenus de continuer à prendre en compte les circonstances particulières de chaque cas en décidant si une indemnisation doit être allouée, et, dans l’affirmative, pour quel montant. La Section 284 permet aux cours de district fédérales d’exercer leur discrétion d’une manière libre de la contrainte inélastique du test prévu par la jurisprudence Seagate. En conformité avec une pratique d’allocations de dommages punitifs en droit des brevets ancienne de presque deux siècles, cependant, ces dommages punitifs doivent généralement être réservés pour les cas les plus graves, caractérisés par la conscience et la libre volonté de commettre l’illicéité.

Par ailleurs, le test Seagate n’est pas conforme à la Section 284 pour une seconde raison, procédurale cette fois : ce test exige que l’indifférence de l’auteur face à sa violation soit prouvée par le critère de la preuve claire et convaincante (« clear and convincing »), un des critères les plus exigeants. A cet égard, dans une autre affaire, la Cour avait jugé que ce standard de preuve ne pouvait s’appliquer à l’allocation de dépens au sens de la Section 285. Or la Section 285 n’apporte aucune base permettant d’imposer une règle de preuves aussi exigeante. Il en est de même s’agissant de la Section 284. Ces deux Sections n’imposent aucun standard de preuves en particulier, et surtout pas celui de la preuve « clear and convincing ». Il importe à cet égard de constater que le Congrès a prévu un tel standard de preuves ailleurs dans le droit des brevets (35 U.S.C. §273(b)), mais pas à la Section 284 ni à la Section 285. Et rien dans la pratique historique ne permet de retenir ici un standard de preuves aussi élevé. La Cour rappelle en conclusion que les procédures en violation des brevets ont toujours été gouvernées par le standard moins exigeant de la prépondérance des preuves (« preponderance of the evidence »). Ce standard s’applique donc également à la question des dommages punitifs.

Enfin, la Cour rejette ici l’analyse en trois parties adoptée par le Circuit fédéral pour trancher en appel. En effet, dans la mesure où les cours de district sont appelées à exercer leur discrétion pour accorder des dépens et pour prononcer des dommages punitifs, le standard de révision approprié en procédure d’appel est celui de l’abus de discrétion.

(Dans le jargon des spécialistes en droit des brevets, les Trolls sont des entités qui détiennent des brevets dans le but premier d’en requérir le respect de la part de prétendus auteurs de violations, en tentant d’extorquer de ces auteurs des royalties fondées sur un contrat de licence, contre une renonciation à procéder).

Nickerson v. Stonebridge Life Ins. Co., S213873

Punitive damages: Compensatory damages: Due Process Clause of the Fourteenth Amendment: Veterans (medical care at no cost): Insurance law: Attorney fees (v. insurance company): Good faith and fair dealing: Clear and convincing evidence: Jury: Bias:

The due process clause of the Fourteenth Amendment to the United States Constitution prohibits states from imposing grossly excessive punitive damages awards on tortfeasors. (BMW of North America, Inc. v. Gore (1996) 517 U.S. 559, 568 (Gore).) To determine whether a jury‘s award of punitive damages is grossly excessive, reviewing courts must consider, among other factors, whether the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff by comparing the amount of compensatory damages to the amount of punitive damages. (State Farm Mut. Automobile Ins. Co. v. Campbell (2003) 538 U.S. 408, 426 (State Farm).) Absent special justification, ratios of punitive damages to compensatory damages that greatly exceed 9 or 10 to 1 are presumed to be excessive and therefore unconstitutional. (Simon v. San Paolo U.S. Holding Co., Inc. (2005) 35 Cal.4th 1159, 1182 (Simon).)

The question in this case concerns the proper calculation of the punitive-compensatory ratio when the parties have agreed to have the trial court determine a component of the plaintiff‘s compensatory damages — here, the attorney fees plaintiff was compelled to expend to obtain the insurance benefits to which he was entitled (see Brandt v. Superior Court (1985) 37 Cal.3d 813, 817 (Brandt)) — after, rather than before, the jury has rendered its punitive damages verdict. The Court of Appeal in this case held that Brandt fees awarded in this manner must be excluded from the calculation in determining whether, and to what extent, the jury‘s punitive damages award exceeds constitutional limits.

We conclude that the Court of Appeal erred. In determining whether a punitive damages award is unconstitutionally excessive, Brandt fees may be included in the calculation of the ratio of punitive to compensatory damages, regardless of whether the fees are awarded by the trier of fact as part of its verdict or are determined by the trial court after the verdict has been rendered. We therefore reverse the judgment of the Court of Appeal.

On February 11, 2008, plaintiff T. N., who is paralyzed from the chest down, broke his leg when he fell from the wheelchair lift on his van. He was taken to the Department of Veterans Affairs hospital in Long Beach, where, as a veteran, he was entitled to medical care at no cost.

N. was ultimately discharged from the hospital on May 30, 2008, after obtaining the needed part. He had been hospitalized for 109 days total.

Following his discharge from the hospital, N. sought benefits from defendant Stonebridge Life Insurance Company (Stonebridge) under an indemnity benefit policy that promised, as relevant here, to pay him $350 per day for each day he was confined in a hospital for the necessary care and treatment of a covered injury. Some months later, Stonebridge notified N. that it had completed processing his request for benefits. Invoking the policy‘s definition of necessary treatment, Stonebridge determined, without consulting the views of N.‘s treating physicians, that his hospitalization was medically necessary only from February 11 to 29. Stonebridge sent N. a check for $6,450, which represented payment of $150 for one visit to the emergency room and $6,300 for 18 days of hospitalization at $350 per day.

(See Civ. Code, § 3294, subd. (a) [in a civil case not arising from the breach of a contractual obligation, punitive damages may be awarded where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice].)

In our judicial system, although compensatory damages and punitive damages are typically awarded at the same time by the same decisionmaker, they serve distinct purposes. The former are intended to redress the concrete loss that the plaintiff has suffered by reason of the defendant‘s wrongful conduct. The latter . . . operate as private fines intended to punish the defendant and to deter future wrongdoing. (Cooper Industries, Inc. v. Leatherman Tool Group, Inc. (2001) 532 U.S. 424, 432 (Cooper Industries).)

Punitive damages have long been a part of traditional state tort law (Pacific Mutual Life Insurance Co. v. Haslip (1991) 499 U.S. 1, 15 (Haslip)), and the states have broad discretion with respect to their imposition (Cooper Industries, supra, 532 U.S. at p. 433). But because a state‘s system for awarding punitive damages may deprive a defendant of fair notice . . . of the severity of the penalty that a State may impose and  threaten arbitrary punishments, the United States Supreme Court has found that the Constitution imposes certain limits, in respect both to procedures for awarding punitive damages and to amounts forbidden as grossly excessive. (Philip Morris USA v. Williams (2007) 549 U.S. 346, 352–353 (Williams).)

The court has concluded that the due process clause of the Fourteenth Amendment requires states to, among other things, provide for judicial review of the size of a punitive damages award. Such review, the court has explained, has been a safeguard against excessive verdicts for as long as punitive damages have been awarded, reflecting the view that a decision to punish a tortfeasor by means of an exaction of exemplary damages . . . should not be committed to the unreviewable discretion of a jury. (Honda Motor Co. v. Oberg (1994) 512 U.S. 415, 421, 434–435 (Oberg).)

In a series of cases culminating in Gore, 517 U.S. 559, the court developed a set of substantive guideposts that reviewing courts must consider in evaluating the size of punitive damages awards: (1) the degree of reprehensibility of the defendant‘s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases. (State Farm, supra, 538 U.S. at p. 418, citing Gore, at p. 575.) A trial court conducts this inquiry in the first instance; its application of the factors is subject to de novo review on appeal. (State Farm, at p. 418.)

Following the high court‘s guidance, we have explained that ratios between the punitive damages award and the plaintiff‘s actual or potential compensatory damages significantly greater than 9 or 10 to 1 are suspect and, absent special justification . . . , cannot survive appellate scrutiny under the due process clause. (Simon, 35 Cal.4th at p. 1182.)

The controversy between the parties in this case stems from a trial court‘s postverdict award of Brandt fees to the prevailing plaintiff. In Brandt, we held that when an insurance company withholds policy benefits in bad faith, attorney fees reasonably incurred to compel payment of the benefits are recoverable as an element of the plaintiff‘s damages. (Brandt, supra, 37 Cal.3d at p. 815.). We explained that when an insurer breaches the implied covenant of good faith and fair dealing by failing to compensate the insured for a loss covered by the policy, the insurer is liable for any damages which are the proximate result of that breach. (Id. at p. 817.) When an insurer‘s tortious conduct reasonably compels the insured to retain an attorney to obtain the benefits due under a policy, it follows that the insurer should be liable in a tort action for that expense. The attorney‘s fees are an economic loss — damages — proximately caused by the tort. (Ibid.)

After trial, the parties stipulated that the amount of attorney fees to which N. was entitled was $12,500, and the court awarded that amount. The question is whether this amount may be included in the calculation of the ratio of punitive damages to compensatory damages for the purpose of determining whether, and by what amount, the jury‘s $19 million punitive damages award exceeds constitutional limits.

N. argues, and Stonebridge does not dispute, that Brandt fees ordinarily qualify as compensatory damages for purposes of applying the second Gore guidepost. We agree. That conclusion follows from Brandt itself, which held that such fees are recoverable precisely because they are an economic loss — damages — proximately caused by the tort . . . in the same way that medical fees would be part of the damages in a personal injury action. (Brandt, supra, 37 Cal.3d at p. 817; see Major v. Western Home Ins. Co., supra, 169 Cal.App.4th at p. 1224 (The amount of the jury‘s award of Brandt fees . . . may be properly considered . . . in determining if the ratio of punitive damages to the tort damages award is excessive)).

As noted, the due process clause imposes both procedural and substantive limitations to curb arbitrary punitive damages awards. (Williams, supra, 549 U.S. at pp. 352–353.) Relevant procedural limitations include certain constraints on the jury‘s decisionmaking process. For example, the jury must be adequately informed of the nature and purposes of punitive damages in order to reasonably accommodate the defendant‘s interest in rational decisionmaking. (Haslip, supra, 499 U.S. at p. 20.)

(See, e.g., Adams v. Murakami (1991) 54 Cal.3d 105, 109, 114 [holding, as a matter of state law, that evidence of a defendant‘s financial condition is a prerequisite to an award of punitive damages, and that such evidence must appear in the record on appellate review, because, among other things, absent financial evidence, a jury will be encouraged (indeed, required) to speculate as to a defendant‘s net worth in seeking to return a verdict that will appropriately punish the defendant].)

Should a reviewing court conclude that the jury‘s punitive damages award is excessive, the remedy is not to set the award aside — as the court would if it determined that the jury‘s decisionmaking process was tainted by bias or prejudice (see, e.g., Weathers v. Kaiser Foundation Hospitals (1971) 5 Cal.3d 98, 110) or by confusion about the question to be answered (see, e.g., Pease v. Beech Aircraft Corp. (1974) 38 Cal.App.3d 450, 465) — but to reduce the award to constitutional limits (Simon, supra, 35 Cal.4th at p. 1187).

Gore, supra, 517 U.S. at pp. 583–584 (reviewing the civil penalties available under the consumer protection laws of several states before concluding that the punitive damages award at issue was substantially greater than the statutory fines available in Alabama and elsewhere for similar malfeasance.)

In sum, we find no reason to exclude the amount of Brandt fees from the constitutional calculus merely because they were determined, pursuant to the parties‘ stipulation, by the trial court after the jury rendered its punitive damages verdict. On the contrary, to exclude the fees from consideration would mean overlooking a substantial and mutually acknowledged component of the insured‘s harm. The effect would be to skew the proper calculation of the punitive-compensatory ratio, and thus to impair reviewing courts‘ full consideration of whether, and to what extent, the punitive damages award exceeds constitutional bounds

(Cal. S.C., June 9, 2016, Nickerson v. Stonebridge Life Ins. Co., S213873).

La Clause du droit à un procès équitable stipulé par le Quatorzième Amendement de la Constitution interdit aux états de condamner l’auteur d’un préjudice à des dommages-intérêts punitifs largement excessifs. Pour déterminer si un Jury a retenu un montant largement excessif au titre des dommages-intérêts punitifs, la juridiction supérieure doit considérer, parmi d’autres facteurs, si la mesure de la punition est à la fois raisonnable et à la fois proportionnée à la hauteur du dommage subi par le demandeur, en comparant le montant des dommages compensatoires avec le montant des dommages punitifs. En l’absence de justifications spéciales, un ratio dommages punitifs/dommages compensatoires qui excède de manière importante 9 ou 10/1 implique que les dommages punitifs sont présumés excessifs, conséquemment inconstitutionnels.

La question que pose la présente espèce porte sur la manière de calculer le ratio dommages punitifs/dommages compensatoires lorsque les parties ont convenu de laisser le Tribunal (et non le Jury) fixer – après que le Jury ait rendu son verdict condamnant au paiement de dommages punitifs - le montant d’un poste du dommage compensatoire dû au demandeur, ici les frais d’avocat que le demandeur a été contraint de dépenser pour obtenir les prestations d’assurance auxquelles il avait droit. En l’espèce, la cour d’appel a jugé que les dépens alloués de cette manière doivent être exclus du calcul visant à déterminer si, et dans quelle mesure, le montant des dommages punitifs excède les limites constitutionnelles.

La Cour Suprême de Californie renverse la décision précitée de la cour d’appel. Elle juge que les dépens doivent être inclus dans le calcul visant à déterminer si les dommages punitifs sont ou non constitutionnellement excessifs. Il n’importe pas que ces dépens soient accordés par le verdict du Jury (chargé d’établir les faits) ou par le Tribunal après le verdict du Jury.

Les faits essentiels de la présente affaire sont les suivants : le 11 février 2008, le demandeur T.N., paralysé des membres inférieurs, s’est cassé une jambe en tombant de sa chaise roulante. Il a été conduit à l’hôpital réservé aux vétérans des forces armées où, en qualité de vétéran, il a droit à des soins médicaux gratuits. N. a quitté l’hôpital le 30 mai 2008, après 109 jours. Subséquemment, il a sollicité les prestations de l’un de ses assureurs, auprès duquel il avait conclu une police prévoyant une indemnisation de $350 par jour d’hospitalisation nécessaire au traitement d’un préjudice corporel couvert. Quelques mois plus tard, l’assureur rendit sa prise de position, dans laquelle il invoquait la définition du traitement nécessaire figurant dans la police d’assurance pour déterminer, sans consulter les médecins-traitants, que l’hospitalisation n’était médicalement nécessaire que du 11 au 29 février. L’assureur envoya à N. un chèque de $6'450 représentant le paiement de $150 pour une visite en salle d’urgence et de $6'300 pour 18 jours d’hospitalisation à $350 la journée.

Excursus : selon la § 3294 subdivision a du Code civil, dans une affaire extracontractuelle de droit civil, des dommages punitifs peuvent être alloués s’il est prouvé selon le standard « clair et convaincant » que l’auteur s’est rendu coupable « d’oppression, de fraude ou de malice ».

Bien que les dommages compensatoires et les dommages punitifs sont typiquement alloués au même moment par la même autorité adjudicative, ils servent des buts différents. Les premiers tendent à compenser la perte effective subie par le demandeur suite à la conduite illicite du défendeur. Les seconds s’analysent en amendes privées visant à punir le défendeur et à prévenir une récidive.

Les dommages punitifs font de longue date partie du droit de la responsabilité civile des états, et les états disposent d’une large discrétion pour les accorder. Mais comme l’allocation de ces dommages par une cour d’un état peut priver la partie qui les doit d’un avertissement équitable relatif à la sévérité de leur montant, constituant ainsi éventuellement une punition arbitraire, la Cour Suprême fédérale a jugé que la Constitution imposait certaines limites, tant procédurales que s’agissant des montants, qui ne sauraient être « largement excessifs ».

La Cour Suprême fédérale a conclu que la Clause du procès équitable prévue par le Quatorzième Amendement imposait notamment aux états de prévoir une voie de recours portant sur le montant alloué au titre des dommages punitifs. La décision de punir ainsi l’auteur d’un acte illicite ne saurait relever de la seule discrétion d’un Jury.

Dans toute une série de décisions, la Cour a développé trois critères que les Tribunaux doivent suivre en allouant des dommages punitifs : 1 ) le degré de répréhensibilité de la conduite de l’auteur, 2 ) la disparité entre le dommage effectif ou potentiel subi par la victime et le montant des dommages punitifs, 3 ) la différence entre les dommages punitifs et le montant de peines civiles autorisées ou imposées dans des affaires semblables (p.ex. en droit de la consommation). L’application de ces trois facteurs est revue de novo en appel.

A la suite des principes posés par la Cour Suprême fédérale, la Cour Suprême de Californie a exposé que le ratio entre les dommages punitifs et les dommages compensatoires effectifs ou potentiels significativement plus grand que 9 ou 10/1 est suspect et que sans une justification spéciale les dommages punitifs affectés de tels ratios seront annulés par l’autorité supérieure en application de la Clause du droit à un procès équitable.

En l’espèce, est litigieuse l’attribution de dépens, par la cour, après le verdict du Jury. Dans sa jurisprudence Brandt (Brandt v. Superior Court (1985) 37 Cal.3d 813, 817), la Cour a jugé qu’une compagnie d’assurance qui refuse de mauvaise foi de servir ses prestations sera condamnée à payer les honoraires d’avocat de l’assuré, en tant que poste distinct de son dommage, et en tant que ces honoraires sont raisonnablement nécessaires pour contraindre l’assureur à prester. En effet, en portant ainsi atteinte à son engagement implicite d’agir de bonne foi et équitablement (implied covenant of good faith and fair dealing), l’assureur est tenu d’indemniser son client pour tous les dommages en lien de causalité adéquate avec l’atteinte à dit engagement.

Après la procédure devant le Jury, les parties ont stipulé que le montant des honoraires d’avocat dus à l’assuré s’élevaient à $12'500, et le Tribunal adjugea cette somme. La question est maintenant de savoir si dite somme peut être comprise dans le calcul du ratio dommages punitifs/dommages compensatoires dans le but de déterminer si le verdict du Jury, qui a accordé des dommages punitifs par 19 millions de dollars, est conforme à la Constitution.

La Cour juge ici que ces honoraires d’avocat constituent un poste distinct des dommages compensatoires, et qu’ils doivent ainsi être pris en compte dans le calcul du ratio dommages compensatoires/dommages punitifs.

(Comme indiqué précédemment, la Clause du droit à un procès équitable impose des contraintes procédurales et de fond lors de l’allocation de dommages punitifs. Au niveau procédural, par exemple, le Jury doit être adéquatement informé de la nature et des buts des dommages punitifs de manière à prendre raisonnablement en compte les intérêts du défendeur, dans le cadre d’un processus de décision rationnel).

(La Cour a jugé par ailleurs que la preuve de la situation financière du défendeur doit être apportée avant que ne soit rendu un jugement condamnant à des dommages punitifs, dite preuve devant ressortir du dossier d’appel parce qu’en son absence, un Jury sera encouragé, et même contraint, à spéculer sur la fortune à disposition du défendeur dans la détermination du montant qui punira le défendeur de manière appropriée).

Si la cour supérieure juge que le montant des dommages punitifs retenu par le Jury est excessif, le remède n’est pas l’annulation du Jugement inférieur, mais la réduction, dans des limites constitutionnelles, du montant desdits dommages punitifs. Un jugement sera pour sa part annulé si la procédure devant le Jury est teintée de parti pris ou par confusion s’agissant de la question à répondre.

En conclusion, la Cour ne voit pas de raison d’exclure la condamnation à payer les honoraires d’avocat du calcul constitutionnel du seul fait que la condamnation portant sur le montant est, selon l’accord des parties, le fait du Tribunal après le verdict du Jury condamnant, lui, à des dommages punitifs sur le principe.